fun-gi

2017 Report

Filed on April 27, 2018

Dear investors,

Hi Wefunder investors - while I've done a decent job of keeping everyone updated via email and Facebook, I wanted to thank everyone again for the positive spirits and support you've provided in 2017. Everyone has seen how well House Flip with Chip and Jo is doing on iOS, and it's only the beginning as we have Android launching in Q2 of 2018 (not to mention being available in 15 different languages around the world). We're hustling to create even more value on your investment, and (fingers crossed) hopefully we can see that equity event for you before the end of 2018!

We need your help!

We've loved the Wefunder investor support as well as the kind words that have been shared over email and Facebook. Please continue supporting us by sharing with your friends and family the investment you've made in fun-gi as well as all of the news we've been making with House Flip with Chip and Jo. Android is right around the corner, and we have a lot more features and content to deliver, so your sharing our progress is incredibly helpful.

Sincerely,

Alfred Fung

CEO

Our Mission

Growing brands need a new way to capture the attention of fans—with a smartphone in the hands of 68% of Americans, mobile games are the answer. Already, some of TV's top brands like Pokemon and The Walking Dead have ventured into mobile games and apps. fun-gi will become the game development platform for brands who want to give fans a new, meaningful way to engage in brand-specific experiences. It starts with America's home-renovating sweethearts, Chip and Joanna Gaines.

2017 At a Glance

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We design and publish games that enable emerging brands to engage fans beyond traditional media. Our first partners are the stars of HGTV's most-watched show ever: Chip and Jo of 'Fixer Upper'. We will be launching our mobile game, House Flip, following the premiere of 'Fixer Upper' season 4 in mid December.Growing brands need a new way to capture the attention of fans—with a smartphone in the hands of 68% of Americans, mobile games are the answer. Already, some of TV's top brands like Pokemon and The Walking Dead have ventured into mobile games and apps. fun-gi will become the game development platform for brands who want to give fans a new, meaningful way to engage in brand-specific experiences. It starts with America's home-renovating sweethearts, Chip and Joanna Gaines.

Milestones

FUN-GI GAMES LLC was incorporated in the State of California in May 2015.

Our company was organized in May 2015 and has limited operations upon which prospective investors may base an evaluation of its performance.

Revenues & Gross Margin. For the period ended December 31, 2016, the Company had revenues of $0 compared to the year ended December 31, 2017, when the Company had revenues of $310,314.74. Our gross margin was 0% in fiscal year 2016, compared to 76.72% in 2017.

Assets. As of December 31, 2016, the Company had total assets of $84,560, including $82,894 in cash. As of December 31, 2017, the Company had $1,738,912.14 in total assets, including $131,324.27 in cash.

Net Loss. The Company has had net losses of $73,274 and net losses of $146,634.60 for the fiscal years ended December 31, 2016 and December 31, 2017, respectively.

Liabilities. The Company's liabilities totaled $33,784 for the fiscal year ended December 31, 2016 and $844,729.82 for the fiscal year ended December 31, 2017.

Liquidity & Capital Resources

To-date, the company has been financed with $625,000 in equity and $245,000 in SAFEs.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

Runway & Short/Mid Term Expenses

FUN-GI GAMES LLC cash in hand is $118,256.56, as of April 2018. Over the last three months, revenues have averaged $286,923/month, cost of goods sold has averaged $115,000/month, and operational expenses have averaged $110,000/month, for an average net margin of $61,923 per month. We are already cash flow positive after 4 months of global launch on a single platform.

Product globally launched in December of 2017 where initial revenues are beginning to ramp up.

With the additional launch of Android, we anticipate both revenues and expenses to increase over the next 3-6 months.

Risks

The history of fun-gi allowed the development of its product with capital from past investors. The future operations depends on fun-gi's ability to create revenue. While fun-gi may consider additional funding in the future through debt and/or equity financing, there is no assurance that additional financing will be made.

The future games fun-gi will develop beyond House Flip depend on timing and relevance of growing brands which can be uncertain.

The freemium business model does rely on economies of scale with a large user base, but every game monetizes at different levels which requires constant improvements. Even beyond insufficient users, convincing players to open their wallets to spend money on a game (even one they love) is not an easy task.

While fun-gi and their development partner, Section Studios, are both committed to bringing on employees who are enabled to execute at the highest levels, the combination of talent, discipline, and dedication are difficult characteristics to find and retain in a team that can build a product with AAA quality.

The social and networked nature of the House Flip game requires an Internet connection to 3rd party platforms and servers which can be susceptible to outages despite standard industry service level agreements.

Game development in general is an iterative process that requires persistent feature and content delivery which exposes its users to both positive and negative experiences until it is refined.

The development of a first-of-its-kind game requires heavy commitments on engineering, design, and art; thus making it a lengthy process and may not be fully completed within anticipated timeframes.

The organic distribution and presence of our House Flip game is dependent upon the brand power of Chip & Joanna Gaines which carries the risks of many well-known and popular figures such as intense public scrutiny from the media.

The games industry is highly competitive with studios and publishers who possess greater financial, developmental, and marketing resources than fun-gi; even though these competitors would be limited with speed to market (given the intensity of engineering and art needed to compete) and the lack of carrying the brand power of Chip & Joanna Gaines.

The consumption of any type of game content competes with the consumption of other types of media including television, movies, social, books, and other games.

Mobile and VR games as an industry is still growing at a rapid pace, but consumption of media can be fickle where users may not be interested in this new type of game.

Even with the partnerships and media support of Chip & Joanna Gaines and Scripps/HGTV, the game might not grow with enough players to generate revenue at the scale needed to support revenue, and thus marketing growth.

Investors won't see a return until the company is acquired or IPO's.

Our company, fun-gi, is pre-revenue, and is raising capital to build and market a product we hope will define a new genre of game with the reknown of Chip & Joanna Gaines from HGTV's hit show, Fixer Upper.

Description of Securities for Prior Reg CF Raise

Additional issuances of securities. Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured. The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.

Issuer repurchases of securities. The Company may have authority to repurchase its securities from unitholders, which may serve to decrease any liquidity in the market for such securities, decrease the percentage interests held by other similarly situated investors to the Investor, and create pressure on the Investor to sell its securities to the Company concurrently.

A sale of the issuer or of assets of the issuer. As a minority owner of the Company, the Investor will have limited or no ability to influence a potential sale of the Company or a substantial portion of its assets. Thus, the Investor will rely upon the executive management of the Company to manage the Company so as to maximize value for unitholders. Accordingly, the success of the Investor’s investment in the Company will depend in large part upon the skill and expertise of the executive management of the Company. If the Management of the Company authorizes a sale of all or a part of the Company, or a disposition of a substantial portion of the Company’s assets, there can be no guarantee that the value received by the Investor, together with the fair market estimate of the value remaining in the Company, will be equal to or exceed the value of the Investor’s initial investment in the Company.

Transactions with related parties. The Investor should be aware that there will be occasions when the Company may encounter potential conflicts of interest in its operations. On any issue involving conflicts of interest, the executive management of the Company will be guided by their good faith judgement as to the Company’s best interests. The Company may engage in transactions with affiliates, subsidiaries or other related parties, which may be on terms which are not arm’s-length, but will be in all cases consistent with the duties of the management of the Company to its unitholders. By acquiring an interest in the Company, the Investor will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.

Minority Ownership

An Investor in the Company will likely hold a minority position in the Company, and thus be limited as to its ability to control or influence the governance and operations of the Company.

The marketability and value of the Investor’s interest in the Company will depend upon many factors outside the control of the Investor. The Company will be managed by its officers and be governed in accordance with the strategic direction and decision-making of its Management, and the Investor will have no independent right to name or remove an officer or member of the Management of the Company.

Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured.

The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.

Exercise of Rights Held by Principal Shareholders

As holders of a majority-in-interest of voting rights in the Company, the unitholders may make decisions with which the Investor disagrees, or that negatively affect the value of the Investor’s securities in the Company, and the Investor will have no recourse to change these decisions. The Investor’s interests may conflict with those of other investors, and there is no guarantee that the Company will develop in a way that is optimal for or advantageous to the Investor.
For example, the unitholders may change the terms of the operating agreement for the company, change the terms of securities issued by the Company, change the management of the Company, and even force out minority holders of securities. The unitholders may make changes that affect the tax treatment of the Company in ways that are unfavorable to you but favorable to them. They may also vote to engage in new offerings and/or to register certain of the Company’s securities in a way that negatively affects the value of the securities the Investor owns. Other holders of securities of the Company may also have access to more information than the Investor, leaving the Investor at a disadvantage with respect to any decisions regarding the securities he or she owns.
The unitholders have the right to redeem their securities at any time. Unitholders could decide to force the Company to redeem their securities at a time that is not favorable to the Investor and is damaging to the Company. Investors’ exit may affect the value of the Company and/or its viability.
In cases where the rights of holders of convertible debt, SAFES, or other outstanding options or warrants are exercised, or if new awards are granted under our equity compensation plans, an Investor’s interests in the Company may be diluted. This means that the pro-rata portion of the Company represented by the Investor’s securities will decrease, which could also diminish the Investor’s voting and/or economic rights. In addition, as discussed above, if a majority-in-interest of holders of securities with voting rights cause the Company to issue additional units, an Investor’s interest will typically also be diluted.
Based on the risks described above, the Investor could lose all or part of his or her investment in the securities in this offering, and may never see positive returns.

Restrictions on Transfer

The securities offered via Regulation Crowdfunding may not be transferred by any purchaser of such securities during the one year period beginning when the securities were issued, unless such securities are transferred:

to the issuer;

to an accredited investor ;

as part of an offering registered with the U.S. Securities and Exchange Commission; or

to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.

Valuation Methodology for Prior Reg CF Raise

The initial amount invested in a SAFE is determined by the investor, and we do not guarantee that the SAFE will be converted into any particular number of
units .
As discussed in Question 13, when
we engage in an offering of equity interests involving
Units ,
Investors may receive a number of
Units calculated as
either (i) the total value of the
Investor’s investment, divided by the price of the
Unit being
issued to new Investors, or (ii) if the valuation for the company is more than
$10 million , the amount invested divided by the quotient of (a) the Valuation Cap
( $10 million ) divided by (b) the total amount of the Company’s capitalization at
that time.
Because there will
likely be no public market for our securities prior to an initial public
offering or similar liquidity event, the price of the
Units that
Investors will receive, and/or the total value of the Company’s capitalization,
will be determined by our
management .
Among the factors we may consider in determining the price of
Units are prevailing market conditions, our financial information, market
valuations of other companies that we believe to be comparable to us, estimates
of our business potential, the present state of our development and other
factors deemed relevant.
In the future, we
will perform valuations of our
units
that take into account, as applicable, factors such as the following:

unrelated third party valuations;

the price at which we sell other securities in light
of the relative rights, preferences and privileges of those securities;

our results of operations, financial position and
capital resources;

current business conditions and projections;

the marketability or lack thereof of the securities;

the hiring of key personnel and the experience of our
management;

the introduction of new products;

the risk inherent in the development and expansion of
our products;

our stage of development and material risks related to
our business;

the likelihood of achieving a liquidity event, such
as an initial public offering or a sale of our company given the
prevailing market conditions and the nature and history of our business;

We will analyze
factors such as those described above using a combination of financial and
market-based methodologies to determine our business enterprise value. For
example, we may use methodologies that assume that businesses operating in the
same industry will share similar characteristics and that the Company’s value
will correlate to those characteristics, and/or methodologies that compare
transactions in similar securities issued by us that were conducted in the
market.

Say Hello

Questions? Ideas? Love Letters?

While we are flipping houses and capital is building up why not have the players build and design there own house and sell it on or keep it becoming a property developer.

Ok might not work out but this is where it can get fun. Start small.

Lets say I have £500,000 capital building up I'm not going to use all of that flipping houses. Let's say I want to design my own house and sell that on or keep it.

Let's spend £100.000 on designing my own property. Getting it really nice and fancy and I run out of money. All I do is continue with the main game play and flip a house or 2 for chip n Jo and return to the house build as and when the player is able 2.

Selling houses think that could work as it works now. It's just down to timing and the indervidual selling the house for a profit or not.

Hi Bonaventure - I'll actually have an email out to our group of investors later this month! Our company continues to grow, and House Flip is still top of the charts in multiple countries. Happy Chinese New Year!

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